BY ROSEANN M. JONES
Overall Guam’s economy is improving with cautious optimism for the remainder of 2024 and into 2025.
Guam’s Gross Domestic Product, the dollar value of all goods and services produced in Guam in the post-pandemic years, is stabilizing with an outlook for growth taking shape. The basis for this growth outlook relies on the rise of the island’s defense sector and the steadying of tourism.
Investments in construction lead much of the capital flow with an expectation of increasing and sustained activity through 2025 and beyond. Exports are particularly noteworthy contributors to Guam’s improving GDP with the sales of goods and services to visitors and foreign producers. Visitor arrivals from the U.S. mainland have provided stability in the face of prior declines in the number and spending levels of visitors from Guam’s traditional markets –– Japan, Korea, and Taiwan. An emerging positive outlook for recovery from these markets is expected to improve business and government revenues in 2025. In the near term and likely into 2025 visitor spending, hotel occupancy, and tourism activity will continue to be bolstered by non-leisure, essential travel affiliated with federal investments, construction, and relocation of military personnel and contractors.
Domestically, the high rate of inflation and the cost of capital has dampened local spending and investment. Food, housing, and utility costs remain high as does the cost of ground, sea and air transportation that supports commercial activity. New business creation is rebalancing the number of business closures following the pandemic years. Yet, many of Guam’s businesses maintain a cautious outlook on profitability given the high costs of product acquisition and production. The costs and timeliness of transshipment are contributing to renewed interests in local production particularly with developing technologies such as convergent manufacturing –– the use of just-in-time production technologies to support a local supply chain for the military and other island industries. Advanced communication networks hold the promise of greater access for Guam to diverse markets with new ways of market integration and new opportunities for products, services, and employment. The realization of these developing investments is expected in economic forecasts for 2025 and beyond.
Much of this upside outlook is tempered by concerns about Guam’s capacity to support a changing economic environment that values growth as well as the preservation of its natural resources and culture. Island economies are paying attention to the importance of environmental indicators such as climate change impacts, natural resource management, migration, and sustainability issues that affect them. In the balance is how to provide for economic growth within a sustainable environment of natural and human resource capacity. Development and land use are current priorities being addressed through the community’s participation in the Guam Sustainability Plan 2050. Sustaining a workforce is another matter as Guam’s age profile demonstrates a hollowing out at ages 35-49, prime years of worker skill acquisition and productivity.
Competition among employers to meet increasing demand for labor is expected to continue. At present, employment trends profile Guam’s private sector workforce growing from 59,470 persons employed in 2022 to 64,680 in 2023. Release of the May 2024 data is forthcoming with an expectation of growth in private sector employment as occupations in construction and construction-related fields continue.
Federal investments in education and workforce development are underway to prepare for the demands of a more diverse private sector and the need to fill gaps in essential public services.
The government of Guam forecasts improving revenues from overall growth in economic activity through the remainder of this year and next as federal government expenditures represent the largest source of funds to Guam’s economy. New business formation, wage and price inflation, construction investments, and greater federal program reimbursements contribute to an outlook of revenue growth for the public sector.
Guam’s economic recovery is expected to continue through 2025 and may likely outperform with a rebound in the tourism sector. mbj
Roseann Jones is a professor of economics and dean of the School of Business and Public Administration at the University of Guam. To contact her, email [email protected].
Overall Guam’s economy is improving with cautious optimism for the remainder of 2024 and into 2025.
Guam’s Gross Domestic Product, the dollar value of all goods and services produced in Guam in the post-pandemic years, is stabilizing with an outlook for growth taking shape. The basis for this growth outlook relies on the rise of the island’s defense sector and the steadying of tourism.
Investments in construction lead much of the capital flow with an expectation of increasing and sustained activity through 2025 and beyond. Exports are particularly noteworthy contributors to Guam’s improving GDP with the sales of goods and services to visitors and foreign producers. Visitor arrivals from the U.S. mainland have provided stability in the face of prior declines in the number and spending levels of visitors from Guam’s traditional markets –– Japan, Korea, and Taiwan. An emerging positive outlook for recovery from these markets is expected to improve business and government revenues in 2025. In the near term and likely into 2025 visitor spending, hotel occupancy, and tourism activity will continue to be bolstered by non-leisure, essential travel affiliated with federal investments, construction, and relocation of military personnel and contractors.
Domestically, the high rate of inflation and the cost of capital has dampened local spending and investment. Food, housing, and utility costs remain high as does the cost of ground, sea and air transportation that supports commercial activity. New business creation is rebalancing the number of business closures following the pandemic years. Yet, many of Guam’s businesses maintain a cautious outlook on profitability given the high costs of product acquisition and production. The costs and timeliness of transshipment are contributing to renewed interests in local production particularly with developing technologies such as convergent manufacturing –– the use of just-in-time production technologies to support a local supply chain for the military and other island industries. Advanced communication networks hold the promise of greater access for Guam to diverse markets with new ways of market integration and new opportunities for products, services, and employment. The realization of these developing investments is expected in economic forecasts for 2025 and beyond.
Much of this upside outlook is tempered by concerns about Guam’s capacity to support a changing economic environment that values growth as well as the preservation of its natural resources and culture. Island economies are paying attention to the importance of environmental indicators such as climate change impacts, natural resource management, migration, and sustainability issues that affect them. In the balance is how to provide for economic growth within a sustainable environment of natural and human resource capacity. Development and land use are current priorities being addressed through the community’s participation in the Guam Sustainability Plan 2050. Sustaining a workforce is another matter as Guam’s age profile demonstrates a hollowing out at ages 35-49, prime years of worker skill acquisition and productivity.
Competition among employers to meet increasing demand for labor is expected to continue. At present, employment trends profile Guam’s private sector workforce growing from 59,470 persons employed in 2022 to 64,680 in 2023. Release of the May 2024 data is forthcoming with an expectation of growth in private sector employment as occupations in construction and construction-related fields continue.
Federal investments in education and workforce development are underway to prepare for the demands of a more diverse private sector and the need to fill gaps in essential public services.
The government of Guam forecasts improving revenues from overall growth in economic activity through the remainder of this year and next as federal government expenditures represent the largest source of funds to Guam’s economy. New business formation, wage and price inflation, construction investments, and greater federal program reimbursements contribute to an outlook of revenue growth for the public sector.
Guam’s economic recovery is expected to continue through 2025 and may likely outperform with a rebound in the tourism sector. mbj
Roseann Jones is a professor of economics and dean of the School of Business and Public Administration at the University of Guam. To contact her, email [email protected].